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Just a few blocks from Boston's historic money-management names like Fidelity, Putnam Investments, and Wellington Management sits a small asset manager that took its moniker from a comic-book hero.

The firm's founder, Joseph F. Patton Jr., was a U.S. Navy lieutenant who served a dangerous tour in Vietnam as a swift-boat captain in the late 1960s. His radio call sign on these high-powered, heavily-armed riverboats was Captain Marvel, after the 1940s Fawcett Comics superhero. The name "brought me a lot of luck," says Patton, so he put it on his firm, J.P. Marvel Investment Advisors, when he went out on his own in 2007.

That was a perilous time to begin a fund firm and full-year 2008 losses, while easily beating the market's 38% decline, still amounted to about 28%. Patton, who spent the bulk of his work life in Boston as a senior institutional salesman at the former PaineWebber, persevered. Over five years the Marvel portfolio has gained an average of 2.7% a year, beating the S&P's anemic 0.2% annual return through June of this year, as well as its U.S. equity peer group. Marvel runs mostly separately managed accounts for a management fee of 1%, using hedge-fund techniques to limit risk. A hedge-fund version, the Captain's Fund, will launch in January.

Two themes for Patton: The "energy story is being rewritten" in the U.S. and the Fed has given banks "a gift."
Jason Grow for Barron's

Now overseeing $350 million, the opportunistic firm invests in 40 or so core equity positions, holds some bonds and uses both cash and options on its equity positions to offset its bets. Patton explains that the "10 top positions do the majority of the work" for Marvel, which conducts bottom-up, fundamental analysis on roughly 100 companies, visiting "tons" of them each year. Annual turnover is a very low 20%.
Monsantomon -0.9068425391591096%Monsanto Co.U.S.: NYSEUSD120.2
-1.1-0.9068425391591096%
/Date(1425419761366-0600)/
Volume (Delayed 15m)
:
1983991
P/E Ratio
23.994011976047904Market Cap
58660922832.0373
Dividend Yield
1.6304799933449796% Rev. per Employee
695045More quote details and news »moninYour ValueYour ChangeShort position
(ticker: MON), one of the firm's biggest positions at 3%, is a typical holding for 69-year old Patton, who's bought and sold some of his holdings a few times during a four-decade career. He first got to know Monsanto in the past 10 years when he bought the little-followed stock for some accounts at just $6 a share. Today he thinks its seed and fertilizers can be a valuable aid to farmers who are contending with a fierce drought. Marvel purchased the stock in January, at $72; it was trading last week at $91.16 and he thinks it could top $100.

At present, Patton, who gained hedge-fund experience running the high-net-worth group for Longwood Investment Advisors, is focused on an eclectic group of energy stocks, big drug companies paying fat dividends, banks, and municipal bonds.

The energy story, says Patton, "is being rewritten in this country" because U.S. imports, as a share of global consumption, have fallen to 42% from 60% in 1995. At the same time U.S. oil production is rising faster than in any non-OPEC nation, he notes. Marvel has been buying
QEP Resourcesqep -1.3133640552995391%QEP Resources Inc.U.S.: NYSEUSD21.415
-0.285-1.3133640552995391%
/Date(1425419762635-0600)/
Volume (Delayed 15m)
:
1749085
P/E Ratio
4.891552511415525Market Cap
3809435200.15717
Dividend Yield
0.3733955659276546% Rev. per Employee
4463140More quote details and news »qepinYour ValueYour ChangeShort position
(QEP), an independent natural-gas and oil-exploration and production company, working mostly in the Rocky Mountains and Midwest. Spun off from
Questarstr 1.5727391874180865%Questar Corp.U.S.: NYSEUSD23.25
0.361.5727391874180865%
/Date(1425419758790-0600)/
Volume (Delayed 15m)
:
950937
P/E Ratio
18.007751937984494Market Cap
4017080331.11878
Dividend Yield
3.6160137752905723% Rev. per Employee
689449More quote details and news »strinYour ValueYour ChangeShort position
(STR) in 2010, QEP gathers, compresses, and processes natural gas. "A dozen years ago, shale gas represented only 2% of total U.S. dry production. It is now 37%," Patton says. QEP has stepped up its purchase of acreage in shale basins, and recently agreed to buy North Dakota oil assets, expanding its Williston Basin holdings. The shares trade at $32.04 and Marvel has a target of $35. It projects earnings of $1.45 a share in 2012, $2.10 in 2013 and $2.40 in 2014.

Like Monsanto,
General ElectricGE -1.0340865568747606%General Electric Co.U.S.: NYSEUSD25.84
-0.27-1.0340865568747606%
/Date(1425419760852-0600)/
Volume (Delayed 15m)
:
23348531
P/E Ratio
17.63989619613467Market Cap
262201649244.502
Dividend Yield
3.5617361140684705% Rev. per Employee
481469More quote details and news »GEinYour ValueYour ChangeShort position
(GE) is an old acquaintance of Patton's, who sold it prior to the financial crisis in the high $30s and then bought it back early this year at $18. Marvel projects the industrial conglomerate will earn $1.55 in 2012, $1.74 in 2013 and then somewhere north of $1.90 in 2014. That should allow the stock to hit the mid-20s over the next year, he estimates. Its once embattled finance unit, GE Capital, he notes, has resumed paying a dividend to its parent, and should benefit as U.S. housing regains strength. Pricing is improving in many of GE's main markets like aviation, turbines, and oil and gas servicing, and the company seems to be getting back on track in China. An added fillip: a dividend yield of 3%.

Although he's underweight the group, Patton does like a couple of banks in particular:
JPMorgan Chasejpm 0.30759268253197347%JPMorgan Chase & Co.U.S.: NYSEUSD61.96
0.190.30759268253197347%
/Date(1425419761389-0600)/
Volume (Delayed 15m)
:
11185794
P/E Ratio
11.375Market Cap
230297894992.819
Dividend Yield
2.585649644473174% Rev. per Employee
406463More quote details and news »jpminYour ValueYour ChangeShort position
(JPM) and
SunTrust BanksSTI 0.36346014053792103%SunTrust Banks Inc.U.S.: NYSEUSD41.42
0.150.36346014053792103%
/Date(1425419760697-0600)/
Volume (Delayed 15m)
:
1988137
P/E Ratio
12.662258143521921Market Cap
21581693837.405
Dividend Yield
1.9342359767891684% Rev. per Employee
334402More quote details and news »STIinYour ValueYour ChangeShort position
(STI). The rebound in housing should help all banks and the Federal Reserve's new program of buying mortgage-related securities will furnish even more support, he says. SunTrust rated highly on a Marvel technical screening of bank stock prices and posted a positive earnings surprise not long after the firm bought shares. "Management is accelerating the cleanup of nonperforming loans, plus they are based in high growth states" such as Florida, the Carolinas, Georgia and Washington, D.C. With the caveat that the turn in housing could take awhile, Patton forecasts SunTrust will earn $2.80 next year and $3.14 in 2014. His price target for SunTrust is $34-$35 a share, up from $29.03 recently.

Patton also bought JPMorgan in part because of the Fed's largesse: "They've been given a gift," as he puts it. He prefers JPMorgan to other big banks because of its dividend and high-quality service. Unfortunately, he snapped up the stock before CEO Jamie Dimon revealed its huge trading loss in London. Marvel started accumulating shares at $41, and bought more when they subsequently fell to $32. The firm believes they're worth $46 to $50 a share. It forecasts earnings of $5.20 to $5.30 a share in 2013, and $5.62 in 2014. At a forward price-earnings multiple of seven, the stock is cheap and its dividend yield is 2.9%.

Dividends are also a major attraction in the pharmaceutical sector, where Patton believes investors have to take a long-term perspective. There are near-term worries about the group, but "no matter what happens with health care, there will be people buying drugs and there are more people 80 years old and older than ever before." His choices are
Johnson & Johnson jnj -0.9300523154427437%Johnson & JohnsonU.S.: NYSEUSD102.26
-0.96-0.9300523154427437%
/Date(1425419762047-0600)/
Volume (Delayed 15m)
:
4927600
P/E Ratio
17.947832815837437Market Cap
290435670725.638
Dividend Yield
2.7381988519123386% Rev. per Employee
580258More quote details and news »jnjinYour ValueYour ChangeShort position
(JNJ),
Abbott Laboratoriesabt -0.29648454044896233%Abbott LaboratoriesU.S.: NYSEUSD47.08
-0.14-0.29648454044896233%
/Date(1425419762701-0600)/
Volume (Delayed 15m)
:
4672912
P/E Ratio
31.403460588717913Market Cap
71253944293.1861
Dividend Yield
2.0405994260814113% Rev. per Employee
293435More quote details and news »abtinYour ValueYour ChangeShort position
(ABT), and
Bristol-Myers Squibbbmy -0.6605136436597111%Bristol-Myers Squibb Co.U.S.: NYSEUSD61.8885
-0.4115-0.6605136436597111%
/Date(1425419760601-0600)/
Volume (Delayed 15m)
:
3320634
P/E Ratio
51.19421487603306Market Cap
103549952748.018
Dividend Yield
2.3892162402130923% Rev. per Employee
635160More quote details and news »bmyinYour ValueYour ChangeShort position
(BMY). His largest position in drug makers is Bristol-Myers, which he picked up in 2009 when it was yielding 6%. The rise in the shares has cut the yield to a still respectable 4%. He thinks the stock could hit $40 from $33 recently.

A LESSER KNOWN HOLDING is
LKQlkq 0.463429377392706%LKQ Corp.U.S.: NasdaqUSD24.93
0.1150.463429377392706%
/Date(1425419754770-0600)/
Volume (Delayed 15m)
:
2327179
P/E Ratio
19.637795275590552Market Cap
7530186429.76158
Dividend Yield
N/ARev. per Employee
283196More quote details and news »lkqinYour ValueYour ChangeShort position
(LKQ), essentially a collection of junkyards assembled since the late 1990s. Financier H. Wayne Huizenga was an early investor in the company. The Chicago-based outfit provides replacement parts to repair cars and trucks in North America, Mexico, Central America, and the U.K. "It's a commodities play as well as a play on the aging automobile replacement cycle in the U.S.," Patton says. The stock is up to $19 a share, from $12 a year ago.

As any of their equity positions approaches its target price, Patton and his seven-person crew must decide whether to sell or not. If they still like the company, they sometimes will sell call options on a portion of its holding, thereby continuing to collect income but allowing some of its shares to be called away. "Options help us minimize the risk in the portfolio," he says.

Patton has over the years owned municipal bonds for individual clients and right now he likes this sector of the fixed-income market. He sticks to general-obligation bonds rated above "A" from issuers with solid balance sheets like Virginia's housing authority as well as the states of Texas, Delaware, and Indiana. "The wild card is taxes" as the fiscal cliff nears, he notes. "If taxes on high earners go up dramatically, municipal bonds will mathematically become more attractive."

The former Navy skipper doesn't waste a lot time sweating about things he can't control, like the stock market's next move. Still, he thinks valuations are "reasonable but no longer dirt cheap." His expectation for 2012 earnings of the S&P 500 is between $100 and $102 a share, a little lower than Wall Street's consensus of $105-$108. Throwing out the tech bubble period, the average multiple of the S&P 500 since 1990 is 16.4 times trailing earnings, notes Patton. He forecasts 2013 S&P profits of $106-$108 with the S&P index hitting 1,525-1,550. "That's about 14 times earnings and that's not expensive," says Patton.